Govt warns of anti-profiteering action after GST

Companies face the risk of government action if they raise prices in anticipation of the change in rates under the goods and services tax (GST) regime to be implemented from July 1, says Union revenue secretary Hasmukh Adhia.

Related Stories

No Related Stories Found

Widgets Magazine

Any benefit of lower rates from GST, on account of input tax refunds, must be passed on, he underlined.

For instance, he said, "all telecom companies should do their own calculation now and adjust tariffs (rates). The tax incidence on them will come down on account of the input tax credit for the servers they use for operations and other hardware and software. Currently, they do not get input tax credit for those".

He was speaking at an interaction with journalists after the GST Council meeting here.

Telecom services will be taxed at 18 per cent under GST, up from 15 per cent now; however, higher refunds are likely to take the actual incidence lower than the current rate.

Adding that if they were getting the benefit of lower cost, they'd have to pass this to consumers, in line with anti-profiteering law.

The government would operationalise the anti-profiteering machinery subsequent to the GST rollout. Even if it was set up after some months, companies would be held accountable for charging a higher price in earlier months as well.

"Any big company could be asked for its costing and balance sheet, as to why they increased prices. Those questions could be asked anytime," said Adhia.

All service providers would be under the scanner and the government could act against any on its own initiative. And, would look at petitions filed by consumers, "All big companies should cooperate with us. They will be called for questioning if they increase prices," cautioned Adhia.

He felt consumer durables would not see an actual increase, despite having been put in the highest tax bracket of 28 per cent, as they'd no longer have to pay octroi and other local taxes. Similarly, small cars should become cheaper under GST, as companies would no longer have to pay cascading taxes, such as excise duty on value added tax. In addition, they will escape octroi and local body levies, national calamity and contingency duty, and infrastructure cess, all of which would be subsumed under GST. Small cars are also now in the 28 per cent tax bracket and will attract a one per cent cess, too.